Taxed Enough Already, state edition

Mike Nichols of the Wisconsin Policy Research Institute on the 2017–19 state budget and efforts by Republicans to increase taxes:

Badger State residents still pay a mother lode of taxes — way more, given how little the average Wisconsinite makes, than almost anyone else in America. That is not hyperbole. Our total state-local tax burden per capita as a percentage of income, 11 percent, is the fourth-highest in the United States, according to the Tax Foundation’s 2017 Facts & Figures report.

If you work for the government or represent a special interest and want to put a better spin on it, ignore how little money most Wisconsinites make in comparison to most other Americans, and just flat-out compare our tax burden to everyone else’s. Wisconsinites pay more per capita in state and local taxes — almost $4,600 — than residents in all but 17 other states.

Our problem isn’t just how much we pay — it’s also the way we pay.

Wisconsin continues to have very high income taxes and property taxes in comparison to other states. High income taxes are particularly destructive because they diminish the incentive to work and also erode savings and investment. High property taxes, especially when levied on business property, can create a powerful disincentive to invest and thereby grow employment and output.

Unfortunately, over 36 percent of state and local tax collections in Wisconsin, based on 2014 figures, come from the property tax, nearly 26 percent from the individual income tax and nearly 4 percent from the corporate income tax. Approximately 19 percent, meanwhile, comes from the general sales tax and the rest from other miscellaneous taxes.

All in all, Wisconsin is:

  • 12th in the country on individual income tax collections per capita
  • 16th in corporate income tax collections per capita
  • 13th in state and local property tax collections per capita
  • 4th in property taxes paid as a percentage of owner-occupied housing value
  • 43rd in state and local sales tax rates
  • 34th in state and local general sales tax collections per capita
  • 17th in state gasoline tax rates
  • 11th in state cigarette tax rates
  • 41st in state spirits excise tax rates
  • 48th in state beer excise tax rates

In a revenue-neutral world, Wisconsin would clearly be better off with lower income taxes and property taxes and a broader-based sales tax. And, by the way, legislators should be very wary of borrowing exorbitant sums. Wisconsin already has the 18th-highest state debt per capita, according to the Tax Foundation.

Here’s hoping that legislators in Madison in the coming days can keep their eyes focused on some of these numbers and their fingers from extending any further into our wallets.

Let’s rearrange Nichols’ list in order:

  • 4th in property taxes paid as a percentage of owner-occupied housing value
  • 11th in state cigarette tax rates
  • 12th in the country on individual income tax collections per capita
  • 13th in state and local property tax collections per capita
  • 16th in corporate income tax collections per capita
  • 17th in state gasoline tax rates
  • 34th in state and local general sales tax collections per capita
  • 41st in state spirits excise tax rates
  • 43rd in state and local sales tax rates
  • 48th in state beer excise tax rates

The alcohol tax rates are the only way Wisconsin could be described as remotely libertarian. The state is only as low as 17th in gas taxes because gas taxes are no longer indexed to inflation, but there is a big push from the road-builders to reindex gas taxes. The state is ranked as low on state and local sales taxes because only counties can assess sales taxes without referendum (and to no one’s surprise most of them have), and other municipalities are limited to referendum-approved projects such as Miller Park and the Lambeau Field renovations.

Taxes are as high as they are because there are no effective limits on tax or spending increases in this state. (Spending and tax limits by legislation are not effective because legislation can be reversed.) That’s why a Taxpayer Bill of Rights within the state Constitution is mandatory to prevent Wisconsin from reaching number one in every tax.

 

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